Creating the perfect legal agreement in terms of law is not always the sought after or perfect solution. When drafting an agreement, what is most critical for me is that the person drafting the agreement gets a solid grasp of the following:
- Why the company wants to enter into this agreement?
- What they foresee this agreement achieving for them?
- The particular operating environment of the company? and
- Any specific requirements or negotiation points they wish to be specifically included in the agreement.
Without knowing the above four points, I think it is hard to be able to draft a good agreement for a company’s purposes, irrespective of how perfect the legalities may be. For example, if an agreement is technically correct legally, but operationally it does not match what a company actually does business at that point in time, the cost of complying with the agreement might involve operational changes to the company’s business, be they systems changes or people training changes. All changes to ways of doing business cost in terms of time and money. This time and money cost could radically alter the business model upon which a company original based the viability for the particular piece of business for which the agreement was required.
an agreement should always be drafted, as far as is legally possible, to mesh seamlessly with a company’s particular operating environment
Whilst it goes without saying that should operational or structural changes be required to comply with law or regulation this is a cost that must be built into the business model. However, an agreement should always be drafted, as far as is legally possible, to mesh seamlessly with a company’s particular operating environment. The operating environment, should never, unless required for legal or regulatory compliance, be required to change to accord with a poorly drafted contract.